Brewdog confirms IPO plans after private equity investment

The founders of craft beer producer and bar chain Brewdog have confirmed that the sale of part of their company is the first step in plans to launch an IPO within the next five years.

Brewdog confirmed this weekend that American private equity firm TSG Consumer Partners have acquired a 22 per cent stake in the business for £213m, giving it a market value of about £1bn.

James Watt told City A.M. that the move supported ambitions to go public with the company in the next four to five years. He said: “That's one of the reasons we wanted to partner with TSG. They have successfully done IPOs before, which is our long-term plan.”

While £100m will be invested in the future of the business, £113m goes towards early shareholder liquidity. The bulk of shares will be bought from the co-founders James Watt and Martin Dickie, who are set to take home around £100m between them.

Watt remains the largest shareholder, reducing his stake from 35 per cent to 25 per cent, while Dickie's will be reduced from 30 per cent to 22 per cent.

Watt also said that the investment would go towards expansion into Asia and Australia, where the company is currently scoping out potential brewing sites.

Brewdog's “equity punks”, who bought shares through previous Crowdcube crowd investment campaigns, gave the green light to the investment last month. Shareholders voted overwhelmingly (95 per cent) to change the company's articles of association, removing their own pre-emption rights to prevent their shares being diluted in the process.

Crowd investors may be in for big returns though, as Brewdog claimed that those who invested in the first round of fundraising back in 2010 now owns shares worth 2,765 per cent of their original value.

As part of the TSG deal, shareholders will be offered the chance to sell a maximum of 40 shares. These will then be owned by TSG, though Brewdog has been given the £113m pot of cash to conduct the buyback. Anyone who refuses the offer will be gifted a voucher for six cans of Brewdog's newest IPA, in a bid to encourage investor loyalty.

Watt sought to calm fears that the company might be losing its independent "punk" roots, saying "Martin and I still remain controlling shareholders and fully committed to Brewdog, and this investment will allow us to accelerate our mission. We’re not going to let the deal go to our heads, but Martin did buy himself a new jumper.”